Kiwis bank on trust

Credit unions have seen a 3 per cent surge in membership as Kiwis gravitate towards financial institutions they feel they can trust, the New Zealand Association of Credit Unions says.

Many would not be aware that credit unions - owned and operated by members - offered the same services as banks, association chief executive Henry Lynch said.

The association's 21 unions - with assets of $625 million and 170,000 members - were the country's sixth largest provider of financial services behind the four trading banks and Kiwibank, he said.

The credit union movement wants to raise its profile and is aiming to use the platform of the international Year of the Co-operative. The event launches in September, which coincides with the association's 50th anniversary, and a series of activities is planned.

People had lost confidence in the financial services sector, Lynch said. But no credit union anywhere went bust during the global financial crisis. "Credit unions are the good guys."

He believed Kiwis were starting to recognise this. While membership remained flat during 2010, it had risen 3 per cent in the first quarter of this year. "There's certainly a move towards organisations that are treating people more fairly."

The association's target market was "Mum and Dad Kiwi battlers", and it placed a big emphasis on education.

Credit unions offered financial coaching and financial management services, and some were doing good work in lower socio-economic areas.

Lynch described the alleged $1 million of employee fraud at the Hibernian Catholic Benefit Society and related Hibernian Credit Union as "sad". The Serious Fraud Office is investigating.

However, Hibernian was not a member of the association, and it was an unusual structure, he said. The association had a high level of regulatory supervision, and would have picked up irregularities sooner.

The movement was awaiting the passage of a bill through Parliament which would remove the $250,000 cap on deposits to credit unions.

Presently a longtime member who sold their house could not invest the proceeds with their credit union because of the cap.